Contracted out pension

I am wondering whether it is possible to make extra contributions to cover the difference between my "Contracted out" state pension and the pension that I would have received, had I not been "contracted out" ?
or do the extra contributions only allow recipients to build up extra years (ie I currently have 29 years + potentially an extra 3 years (according to state pension forecast))
What are the current number of years NI contributions required to receive a max state pension ?
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  • hugheskevi
    hugheskevi Posts: 3,784
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    I am wondering whether it is possible to make extra contributions to cover the difference between my "Contracted out" state pension and the pension that I would have received, had I not been "contracted out" ?

    All you can do is purchase extra qualifying years if you have a gap in your recent National Insurance contribution history. More details at this link.
    What are the current number of years NI contributions required to receive a max state pension ?

    35 for those with contracted-out deductions. For those with contracted-out deductions the figure will vary from person to person depending on their contracted-out history.
  • 50Twuncle
    50Twuncle Posts: 10,763
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    edited 15 October 2016 at 10:48AM
    hugheskevi wrote: »
    All you can do is purchase extra qualifying years if you have a gap in your recent National Insurance contribution history. More details at this link.



    35 for those with contracted-out deductions. For those with contracted-out deductions the figure will vary from person to person depending on their contracted-out history.
    So with my 29 years (plus an added 3 years) - how much will I lose out on ?
    Is it worth me making extra contributions ?
    I am currently earning under the £112 per week limit - but am also receiving an ill heath pension of around £10k
  • hugheskevi
    hugheskevi Posts: 3,784
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    So with my 29 years (plus an added 3 years) - how much will I lose out on ?

    It depends on your contracted-out deduction. The amount of State Pension to which you are entitled to currently will be shown on your State Pension forecast.
    Is it worth me making extra contributions ?

    It depends on whether your ill-health will reduce life expectancy, whether you expect to be in receipt of means-tested benefits and so forth.

    The cost of class 3 contributions for those close to retirement without full entitlement is a good deal in general though.
  • 50Twuncle
    50Twuncle Posts: 10,763
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    edited 15 October 2016 at 11:14AM
    hugheskevi wrote: »
    It depends on your contracted-out deduction. The amount of State Pension to which you are entitled to currently will be shown on your State Pension forecast.



    It depends on whether your ill-health will reduce life expectancy, whether you expect to be in receipt of means-tested benefits and so forth.

    The cost of class 3 contributions for those close to retirement without full entitlement is a good deal in general though.
    So - if they think that I will die before claiming too much state pension - I will pay less ?
    Who decides this ?
    I will NOT be on any means tested benefits
    I am now 53 years old - will it make any difference when I make up the missing years ?
    Does the state pension forcast include details of how and at what cost - I make the added payments ?
  • atush
    atush Posts: 18,719
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    If you are working, but not making enough to pay nics- try and get a feew more hours to put you over.

    Otherwise, pay voluntary nics until you reach 35 full years.
  • hugheskevi
    hugheskevi Posts: 3,784
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    So - if they think that I will die before claiming too much state pension - I will pay less ?

    No, the cost is the same regardless. But if you die before State Pension age or shortly afterward you will get no value from the contributions. This may be particularly relevant in your case as you are in receipt of an ill-health pension at age 53.
    I am now 53 years old - will it make any difference when I make up the missing years ?

    Not really, but the cost is fixed regardless of age so generally it would be better to pay for them later in life (but the cost does increase each year).

    But if you currently have 29 qualifying years you have another 14 years to build up qualifying years, so need to work out whether you will be likely to accrue the full single-tier amount without purchasing any additional years.
    Does the state pension forcast include details of how and at what cost - I make the added payments ?

    No idea, but all the details about additional years are at this page - https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions
  • 50Twuncle
    50Twuncle Posts: 10,763
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    edited 15 October 2016 at 12:22PM
    hugheskevi wrote: »
    But if you currently have 29 qualifying years you have another 14 years to build up qualifying years, so need to work out whether you will be likely to accrue the full single-tier amount without purchasing any additional years.
    Didn't you used to need 35 years for max state pension ?
    has it really increased to 43 years now ?
    http://www.thisismoney.co.uk/money/pensions/article-2634215/Why-millions-WONT-155-new-state-pension-theyre-expecting.html does say 35 years !!
  • Silvertabby
    Silvertabby Posts: 8,972
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    edited 15 October 2016 at 12:50PM
    “ But if you currently have 29 qualifying years you have another 14 years to build up qualifying years, so need to work out whether you will be likely to accrue the full single-tier amount without purchasing any additional years.
    Originally posted by hugheskevi
    Didn't you used to need 35 years for max state pension ?
    has it really increased to 43 years now ?
    It's 35 years of FULL National Insurance contributions. Any years in which you paid reduced NI contributions (because you were contracted out) don't count.

    The employee NI rebate of 1.4% doesn't sound much, but it equates to £25 per month for someone on a salary of £25K. Plus, contracting out meant that your employer also paid reduced employer National Insurance. In their case the rebate was a much higher 3.4%, which almost certainly helped to fund your occupational contracted out pension.

    It remains to be seen how the ending of contracting out will affect occupational pension schemes - they'll have to plug that 3.4% gap somehow.
  • 50Twuncle
    50Twuncle Posts: 10,763
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    It's 35 years of FULL National Insurance contributions. Any years in which you paid reduced NI contributions (because you were contracted out) don't count.

    The employee NI rebate of 1.4% doesn't sound much, but it equates to £25 per month for someone on a salary of £25K. Plus, contracting out meant that your employer also paid reduced employer National Insurance. In their case the rebate was a much higher 3.4%, which almost certainly helped to fund your occupational contracted out pension.

    It remains to be seen how the ending of contracting out will affect occupational pension schemes - they'll have to plug that 3.4% gap somehow.
    I am guessing thar I paid reduced NI all of my 29 years (I was a civil servant)
  • xylophone
    xylophone Posts: 44,140
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    I am guessing thar I paid reduced NI all of my 29 years (I was a civil servant)
    http://forums.moneysavingexpert.com/showthread.php?t=5439410&page=10

    See post 187 - have you obtained a new state pension forecast?
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